Price Pressure Continues in Ferrous Scrap Markets

Written by John Packard

Ferrous scrap markets are trading lower this week. The domestic mills canceled any outstanding tonnage that was due in August under the belief that they would be able to push scrap prices lower for September delivery. That is indeed what is happening according to SMU scrap sources.

One of our larger scrap sources told us:

“The markets landed down $10-15/gt during the past few days and appear to be softening further as domestic scrap supply is plentiful.  Primes are moving down to parity with shredded scrap in the $230-240 range while cut scrap is flirting with the low $200s.  Consumers are cautious on inventory and reportedly order books remain sporadic.  As highlighted during your conference, global pressures on ore-based metallics and semis will keep scrap prices subdued, particularly on industrial generations.  Obsolete flows will likely continue to soften, but the export supply will be enough to quell any pressure.  Overall its SSDM (same stuff, different month)….”

We heard from another scrap source a similar story, “Market is trending down, most sales have been at down $10gt but I believe mills will be able to buy at down $15-20.  Shred is over hanging mkt and cheaper offers are coming from coastal shippers with no alternatives.”

For those of you who attended our Steel Summit Conference, Peter Meyers of Metalico did an excellent job of framing the scrap markets and the pressures that the scrap markets are dealing with, especially Chinese billet sales to Turkey which push down the price of scrap to be exported to Turkey from the U.S.

We will discuss scrap in more detail next week once we are back from the Labor Day holiday in the United States.

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